June 8, 2006

 

European cash wheat stable to lower on US market weakness

 

 

European cash wheat and futures prices were steady to lower Wednesday (Jun 7) due to continued falls in the US market.

 

French spot standard wheat delivered Rouen was mostly down EUR1.00 at EUR108.00-EUR109.00 a tonne. For July/August delivery prices were down EUR0.50 at EUR109.50 a tonne.

 

"Without the US propping up the market, we are due to move lower," said a broker.

 

From its low in late April to its high in mid-May, the Chicago Board of Trade wheat front-month climbed 82 cents to US$4.33 a bushel due to drought in the US southern plains and forecasts for a 25-year low in global ending stocks. But amid this week's losses from fund selling and harvest pressure, the CBOT front month has now given back more than half of those gains.

 

In about the same period the French spot standard wheat delivered Rouen also rose from about EUR105.00/tonne to as much as EUR112.00/tonne.

 

New crop European wheat futures have shown a similar pattern and were lower again Wednesday. November French milling wheat was down EUR1.00 late session at EUR115.50/tonne with 903 lots traded. November London feed wheat settled GBP0.75 lower at GBP75.10/tonne with 93 lots moved.

 

"Now we just have to see what the USDA says on Friday," added the broker. The US Department of Agriculture is scheduled to issue winter wheat crop estimates Friday.

 

Adding to recent pressure, key crops areas in the European Union are in good condition with harvest approaching soon. "The UK could be looking at a bumper crop," said the broker.

 

On the export side, Infograin said Wednesday that Tunisia was looking for some wheat. Jordan issued a tender to buy 50,000 tonnes of wheat for shipment in early August. Syria has again tendered to sell 50,000 tonnes of wheat after recently cancelling its previous tender.

 

In Germany B-quality wheat and feed wheat remained steady at EUR121.00/tonne, with the trade waiting for the EU to release some intervention stocks on the domestic market. The EU grain management committee will meet to discuss licenses Thursday.

 

Wednesday the EU made the decision to release a total of 250,000 tonnes of Polish and German intervention wheat stocks, official by publishing it in its official journal.